Tuesday 3rd January 2012
Good morning. The currency markets enter a new year, and today we’ll have a look at what happened towards the end of 2011 regards Pound vs Euro, Pound vs US Dollar, and a round up of the weeks data that may affect exchange rates.
In this week’s Report:
• Sterling/US Dollar hits near 3 month low
• Pound remains supported against weak Euro
• EU debt crisis fears continue as Italian Bond auction disappoints
• Round up of the week’s data that may affect rates
(For currencies other than GBP, EUR and USD, contact us for a consultation)
Sterling vs. Euro;
The final week of 2011 was not surprisingly a very quiet week with the UK only taking part in 3 days trading. There were only a splattering of fiscal data releases of note with the most notable being the Italian Bond auction.
The refinancing caused a mild stir as they as they managed to reduce their cost of borrowing €7bn from 7.56% to 6.98% although there are still concerns about the high cost of borrowing considering they are expected to need to borrow €450Bln in 2012.
Friday saw the Nationwide house prices data released and despite a slight reduction from November to December of -0.2%, overall house prices in the UK saw a positive movement of 1% during 2011. Nationwide’s outlook for 2012 is for low levels of activity with prices moving sideways for modestly lower.
After a quiet week last week this week we are back into things full swing with a whole host of data releases across the board with a focus on inflationary data releases in the UK and the Eurozone. Keep in contact with your FCG Account Manager for up the minute market movements to help you make the most of your currency.
If you need to buy or sell Euros, send me a free enquiry now.
Sterling vs. US Dollar;
Last week saw Sterling hit a 2 ½ month low versus the dollar, GBP/USD dropped to its lowest since October as investors looked towards the dollar and its safe-haven status. This was on the back of weak demand at an Italian bond auction highlighted risks the euro zone debt crisis could worsen in 2012.
Analysts expect the pound to suffer versus the dollar in 2012 as worsening European debt problems could wreak havoc on London’s financial sector, while speculation about more Bank of England quantitative easing may also sting sterling in the New
Michael Derks, chief strategist at FXPro, said flows into the dollar would continue next year to the detriment of the pound, which could fall towards $1.50 early in 2012. “I would be surprised if the recent spate of dollar demand didn’t continue into the New Year, and if that is the case, then we’re likely to see Cable drift back further.”
With the currency markets being so volatile it is important to keep in touch with your account manager at the Foremost Currency Group to ensure you stay up to speed with the market. If you are buying or selling currency in the next 12 months we can help you make an informed decision to making the most of your currency.
If you need to buy or sell US Dollars, send me a free enquiry now.
Weekly Economic Data that may affect exchange rates
Monday – UK Markets closed for Bank Holiday. There were however some Inflation figures for Germany and Europe however they had little effect on exchange rates.
Tuesday – Global markets re-open after the Christmas break. In the UK the only release of note is PMI data that is a measure of inflation. There are German unemployment figures released at 9am. In the USA there are manufacturing figures and the FOMC minutes showing discussions during their last interest rate decision.
Wednesday – Data starts flowing in earnest now, with UK money Supply, Mortgage Approvals, Lending and Construction data. In Europe we have further inflation figures from the EU and Germany. In the USA we see Mortgage approvals and Factory Orders.
Thursday – There are various Australian releases of note today, including Home Sales, Trade Balance figures and the RBA commodity index. Closer to home, German Retail Sales kicks off the EU data, closely followed by EU Industrial Orders and EU PPI figures. In the UK we see PMI numbers in addition to Halifax House Prices. In the USA there are various Jobless and Manufacturing numbers.
Friday – We end the week focused on EU data: Consumer Confidence, Economic Confidence, Retail Sales and German Factory Orders. We end in the USA with unemployment figures and Non-Farm Payrolls.
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